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Facing $8.6 Million Shortfall, Santa Barbara Explores Potential Cuts

Wide-ranging options get an airing at a budget workshop, but officials say they're not a list of recommendations.

Santa Barbara officials Thursday gave the public a glimpse of how the worst national recession since the 1930s might look locally. It’s not a pretty picture.

During a brainstorming session with the City Council, officials bandied about ideas for closing a projected $8.6 million deficit — roughly 8 percent of Santa Barbara’s entire 2009-2010 general fund of about $103 million — through possible spending cuts, budget shifts, tax increases and additional fees.

City Administrator Jim Armstrong said the bottom line is that the level of services will be reduced.

“There’s no way around it,” he said.

Although officials repeatedly stressed that Thursday’s discussion was merely a skull session, the ideas shared by the staff revealed the far-reaching nature of the impending financial storm, which will strike at the beginning of the new fiscal year, on July 1.

Based on Thursday’s talk, the budget tempest could rip through a wide swath of city services and sectors, including, among others, the Old Spanish Days Fiesta celebration, the Santa Barbara Zoo, cable access TV, the upkeep of State Street, the tourism industry, downtown nightclubs and every city department, including police and fire.

During Thursday’s workshop, everything was on the table. Hypothetical ideas ranged from eliminating the 75 minutes of free downtown parking (generating $3.5 million) to asking voters to raise the sales tax by a quarter-cent (yielding $4.8 million) to appealing to voters to create a tax for 9-1-1 services (raising $2 million).

“These are not recommendations,” city Finance Director Bob Peirson cautioned. “They are simply a brainstorming list of all possible options, given the severity of the budget situation.”

The official recommendations, he added, will come out in April.

Specific targets for the cuts to each department have been assigned, however.

City officials have instructed department heads to prepare proposals to reduce their 2009-2010 budgets by 11 percent, with the exception of police and fire, which have each been asked to trim by about 5 percent.

“We feel that across-the-board cuts are not the way to go,” Peirson said. “We’re attempting to tilt the table away from public safety.”

Still, because the Police Department is by far the city’s largest — its $33 million budget accounts for a third of the city’s total general fund — the amount of its target for cuts in terms of dollars is the also largest, at $1.7 million.

Next hardest hit in terms of dollar amounts would be the Parks & Recreation Department, at just under $1.7 million, followed by community development ($1.1 million) and fire ($1 million).

These numbers represent worst-case scenario cuts, however, and officials said the true retrenchments — after the City Council finishes the dirty job — could be more like 8 percent for most of the city departments, and 4 percent each for the police and fire departments.

City staff members noted that departmental reductions do not necessarily mean layoffs. The city, for instance, could follow Santa Barbara County’s lead in implementing a work furlough, as well as asking unions to agree to withhold already agreed-upon salary raises.

But with 75 percent of the general fund consisting of salaries, it seems unlikely the city will be able to avoid layoffs.

On the revenue side, the biggest factor in Santa Barbara’s impending financial downturn is sales taxes, followed by building permit and planning fees. It comes as little surprise, given the nationwide slump in retail sales, and the bursting of the real-estate bubble.

Also lagging is revenue from hotel bed taxes, which, after a solid summer, plummeted in the fall.

Although Santa Barbara’s list for potential budget reductions was characterized as hypothetical, it included some specific ideas and figures. For instance, the city would save about $700,000 by terminating a contract with the nonprofit Downtown Organization to prune trees, clean sidewalks and maintain the landscaping along State Street downtown.

The city would save $133,000 by ending the longstanding practice of paying the zoo’s water bill. (The arrangement is part of a partnership between the two entities.)

City staff also showed the council how much money would be saved by reducing certain services by 8 percent, which is commensurate with the best-case-scenario cut other city departments are facing. For instance, the city would save $126,000 by reducing, by about 8 percent, the amount of money it pays the Santa Barbara Conference & Visitors Bureau and Film Commission to promote tourism.

Another $50,000 could be saved by reducing the city’s contribution to festivals such as Old Spanish Days Fiesta and the Summer Solstice Parade. And $32,000 could be saved by trimming the contribution to the local cable access station, the Santa Barbara Channels.

Officials said any new taxes must be approved by voters. In addition to a potential new sales tax and 9-1-1 tax, they mentioned the possibility of increasing the hotel bed tax by 1 percent, raising $1.3 million. Tripling the business license tax, they said, would raise up to $4.5 million.

In an illustration of how nothing seems to be off the table, when an audience member suggested placing fees or taxes on the downtown nightclubs — an item that was not included on the city’s list — some City Council members said they liked the idea.

City Councilman Das Williams said he thinks there are a few “no-brainer” items on the list, such as a medical-marijuana dispensing fee, as well as an idea to start fining people who illegally use their private homes as vacation rentals.

“You don’t even need council permission to get (taxes) for vacation rentals,” he said, “You just need to go do it.”

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